5 Conclusions and recommendations

Technology transfer

Innovation, new services by local companies

Creation of start-ups, spinoffs

Cost

Complexity and technical challenges

yes

None

No impact

150 mnl eur

resolved

Only in 1 VC, rest local technology development

Likely yes

Likely yes

300 –400 mln eur

Attracting CO2 to methanol technology owner Secure renewable energy supply

Only in 1 VC, rest local technology development

Highly likely yes

Likely yes

400-500mln eur

Attracting CO2 to methanol technology owner Secure renewable energy supply Engaging construction material manufacturer

Promotion of large-scale industrial initiatives requires solid justification from environmental, economic and social development points of view. The CCU hub initiative that is being launched in the industrial zone of the North Sea Port is one of the most ambitious carbon capture and utilisation initiatives in Europe. Today, when economic prosperity has to be assured in conjunction with social and environmental sustainability, the big challenge is in making the right decision on actions and investment. In the context of the North Sea Port, as well as East Flanders development, this means that the CCU hub is expected to help sustain the local economy, create new jobs, foster economic and innovation linkages, while helping the local industries to reduce their carbon, as well as broader environmental footprints. The present study has tried to analyse how much the planned ideas and piloted projects would be able fulfil the expectations put upon the CCU hub initiative. The study is forward looking and based on lessons of other CCU projects in EU and globally. Considering that the CCU practice is still new and in many cases technologies and value chains are in the R&D and piloting stage the evidenced of actual impacts and lessons from the real practice examples are still scarce. This study largely relied on the consultation with the stakeholders engaged in the CCU projects in the EU and beyond and their analysis and assessments of the impact that can be generated.

5.1 Key take aways In the economic impact dimension, the key observations and conclusions are the following:

Estimates and economic forecasts in this study have demonstrated that implementation of the value chains of CCU-based methanol, ethanol, chemicals/polymers and construction materials can result in €150-250 million annual value added to the local economy.

The competitiveness of most of the CCU-based products under current conditions is likely to be challenged by higher production cost and therefore the higher market price. The

premium price challenge is especially highly relevant for the methanol, chemicals, polymer cases. However, some business cases are secured by creating protected markets such as in China where state guarantees procurement of all CCU-based ethanol produced in the

LanzaTech plant, or with special clients who are ready to pay a premium price, such as methanol from CRI George Olah bought by gasoline and biodiesel companies in the UK,

Netherlands, Sweden and Iceland, in the example where CO2-based polyol was purchased by a mattress manufacturer, Recticel. • Current examples of projects are still small and struggle to secure resources or energy independence from a region or country. But this should change for the better with upscaling and larger scale production. For instance, at Dow the deployment of the CCU technologies and production of synthetic naphtha from the local steel blast furnace gases would be able to offer a significant decrease in dependency on naphtha supplies from oil refineries. Similarly, switching from traditional fuel to methanol by ships hosted by the North

Sea Port would be able to decrease reliance on fossil fuel. For biodiesel producers (Cargill

Bioro and Oleon-Bioediesel) and methylamines producer (Eastman-Taminco), up to 80-90% of methanol supply can be replaced by the CCU based methanol, • There are very few commercial-scale examples of CCU. The CCU initiatives currently implemented in different parts of the world are mostly smaller in scale (i.e. R&I, pilot or demonstration projects). The small scale of these initiatives has not allowed the emergence of new business ecosystems. However, it is believed that larger-scale commercial production is very likely to generate impact in downstream parts of value chains where other companies will start using CCU-based materials/chemicals in their production lines, or introduce new products. • There is an increasing interest from private investors in CCU-based product-oriented businesses. Most of the companies that brought the technology into the market began as start-ups and managed to attract significant investments (e.g. LanzaTech is one of the fastgrowing cleantech companies, as well as CRI, and Orbix, ). Regions piloting such businesses can also benefit from private investment (venture capital, etc.) if they can show an interesting and convincing business idea. In the social impact dimension, the following is found:

Estimates in this study have demonstrated that launching all viable value chains (CCUbased ethanol, methanol, chemicals/polymers, construction materials) considered in this study will result in 200 to 425 new permanent jobs at the industrial facilities, related services, upstream and downstream segments, as well as 1200 to 1600 temporary jobs related to construction and installation. At the same time, there is evidence that no jobs would be lost and some jobs will even be ‘greened over’.

Fostering cross-industry linkages is at the core of the CCU. At the minimum, bilateral links are established between CO or CO2 sources (e.g. steel company) and a partner converting the CO and CO2 into new materials (e.g. chemical company). More complex networks are being established in methanol production where, for example, a renewable energy supplier enters the network; meanwhile the local biodiesel and chemical companies, greenhouse farms or water shipping companies can enter as consumers of the CCU based methanol; and in carbonated concrete production, construction companies enter the network. Other types of companies could be specific technology providers, logistic companies, gas pipeline owners, various service providers, water and waste companies, fuel distributors, export companies, etc.

The image and visibility of the region and the North Sea Port is among the other positive impacts of hosting CCU projects. In light of the increased ambitions in climate change

policies this is an important element in overall regional and national efforts towards reaching the climate targets. Technological and innovation impact is another dimension of socio-economic impacts:

Technological advancement is often reflected in the technological leadership status obtained by a region, or a company, or a CCU cluster. Many CCU projects are pilots or experimentations which allowed their technologies to progress in TRL scale. New patents are filed under many CCU initiatives. Technology transfer is another impact that has been observed in some projects (e.g. LanzaTech bringing CO to ethanol technology). • Fostering knowledge in the region is seen in all CCU projects. Many of them stem from innovative initiatives that helped to strengthen the knowledge base in the region and even attract highly qualified experts. Involving local knowledge organisations has been seen in many projects where they are engaged in experimental or monitoring work. Innovation spill-overs, such as the increased capabilities of other companies, are not always observed but can be potentially expected of the companies represented in the downstream value chain when they start adapting to new input materials and retrofitting their equipment. It was noted that often, with the regulation push towards more sustainable processes, investment is done also in overall modernisation and enlargement of facilities.

5.2 Policy recommendations New technologies present opportunities but usually come with their own economic challenges. Green technologies are special in that the environmental sustainability mission does not always immediately translate into commercial viability. Economic obstacles faced by CCU projects mainly concern (i) the price of the product, and (ii) high investment cost of CCU projects. (i) High price of product

Recommendations:

Promote public procurement instruments for CCU-based products/services, e.g. public transport and shipping services can specify recycled carbon-based fuels in their green procurement products; construction of public buildings or infrastructure can specify procurement of carbonation-based construction materials.

Promote other schemes that will boost demand for CCU products and fuels, e.g. setting specifications for fuel blends, carbonation-based construction materials, recognition under the local green product labelling, etc.

Set examples to follow, e.g. public transport companies (train, water shipping) can shift to

CCU-based fuel use which would create a secured market for the CCU fuel and help in further rolling out to a wider market.

Recognise that CO2 must have a price that induces emitters to re-use it as a resource, (ii) High investments cost wherever fossil replacement technologies are becoming available. Develop mechanisms that effectively lead to a progressive increase of the price of CO2 emissions.

Recommendations:

Ensure diverse EU funding schemes for upscaling and commercial projects in CCU and related technologies such as green hydrogen. Today, many CCU technologies have been developed in labs; they need incentives and direct support to move to the market. Dedicate special support instruments for industrial symbiosis projects. It can be a purely public funding or co-funding of the new facilities, or a combination of public and private financial instruments with favourable financing conditions.

CCU technology is still emerging as a commercially viable field. Promising innovations such as growing bacterial protein from waste CO2, boosting algae farming with industrial CO2, CO2- based specialty chemicals, and numerous other examples need some maturing to scale them up and make them more efficient, ensuring high- quality and safe products, while reducing dependence on high energy and resource inputs, and developing efficient and less costly gas separation, hydrogen production and other auxiliary technologies.

Recommendations:

Encourage carbon-intensive industries that have little room to manoeuvre in cutting their carbon emissions, to invest, introduce and integrate carbon-recycling technologies that can also generate additional value in their local economies. The EU should sustain its leadership in CCU technologies by continuously supporting technology development, commercialisation, upscaling as well as R&I in novel carbon-recycling possibilities. Technological barriers that exist now can find solutions via R&I and testing efforts. All these are needed to de-risk the required CCU development trajectories, to explore alternative processes and find economic and environmental optimisations at different scales and with different process setups.

This is because such performance could be unique to each CCU project and depend on a combination of many factors, including (i) the availability of renewable energy as a guarantee of the climate mitigation potential of CCU products that require energy for production processes, as well as (ii) lack of comprehensive LCA assessment methodology for CCU. (i) Availability of renewable energy

Recommendations:

Policy and investment support are highly recommended in expanding renewable energy production, scaling up existing capacities and launching new renewable energy production capacities, which for CCU projects can be off-grid installations, however overall greening of the electricity grid should be the ultimate aim. Addressing the cost of the renewable energy to encourage its competitiveness against fossilbased energy should be a priority policy objective. Wider deployment is one of the ways to cut production costs and prices (which has been seen with the wind energy deployment). Redistributing fossil fuel subsidies 1 to support renewable energy development, as well as using carbon tax revenues for investment in clean energy production facilities, could also be part of (ii) Lack of a commonly recognised, comprehensive LCA assessment the policy support package.

Recommendations:

Development of a comprehensive LCA guideline for assessing the environmental impact of

CCU projects, as well as common recognition of methodologies across Europe and possibly internationally need to be facilitated on an EU level. For CCU, it is necessary to calculate the

CO2 avoided rather than the CO2 used in the process. The methodology should focus not only on climate mitigation and GHG reduction, but also cover other impacts related to ecosystems, water, land use, air, energy, materials and waste.

LCA results should become a basis for fair recognition of CCU technologies in the European

Emissions Trading Scheme, in as much as they lead to a net reduction of CO2 emissions over the whole life cycle. LCA should also become a basis for demand-boosting instruments for CCU products (e.g. procurement, product certificates and labels, minimum fuel blending quotas, Addressing regulatory gaps etc.). is vital because there is presently no proper framework conditions to help CCU technologies reach wider acceptance and become more competitive and commercially viable.

Recommendations:

Develop a regulatory framework that incentivises both the permanent sequestration of CO2 into, for example, polymers or construction materials by the mineralisation as well as temporary sequestration in CCU fuels. The regulatory setting should assure comprehensive LCA methodology for CCU as a precursor for other regulatory measures (addressed below), and securing an even playing field with bio-based and traditional products. Ensure that CCU is ultimately recognised under the EU Emissions Trading Scheme in order to allow a breakthrough for CCU technologies. Namely, along with the carbon storage via mineralisation, the accrediting of GHG emissions avoided and/or carbon negative emissions should be considered under the EU-ETS.

A smart carbon-pricing system should be introduced to push CCU projects into profitable areas.

Carbon taxation should be applied with a warrantee of an international level playing field –within Europe and with border-tax adjustments between the EU and the rest of the world. 1

Carbon taxation should also be sensitive to various types CCU products: e.g. carbon tax for

CCU fuel could be paid by the CO2 producer, while if it is a CCU product with a longer lifetime (e.g. polymers, construction material) the carbon tax would be paid by the product user. At the same time, benchmarking against footprints of currently used (e.g. fossil-and bio-based) products should be considered in calculating carbon tax.

Ensure full implementation of the revised Renewable Energy Directive (RED II), which includes mandatory targets for CO2-based fuels, via rapid and fair adoption of the required Delegated

Acts 1 . At the same time, encourage members states and regions to consider concrete strategies and plans on deployment of CCU technologies in achieving the 2030 and 2050 climate targets and the new EU Green Deal goals.

Ensure that standardisation bodies (CEN and national bodies) work hand in hand with industry in developing required standards for the new CCU industry (e.g. standards for the quality of POLICY IMPLICATIONS captured CO2). Align policy and regulatory development around industrial symbiosis and CCU, such as on standards development, reporting, indicators, and for promoting CCU by building This study has demonstrated that the environmental, economic and social benefits of CCU favourable framework conditions for industrial symbiosis. technology deployments could be promising for the local economy, while their wider diffusion can offer solid input towards addressing global climate change imperatives. This study, however, also showed that there are a number of obstacles that prevent the CCU initiatives from easily and quickly penetrating current industrial and economic systems. Addressing these

obstacles would need favourable framework and market conditions that can be created by carefully designed policy measures and incentives. With the proliferation of the circular economy in the EU there are growing calls for carbon removal via re-use and storage in products. Yet, CCU is still not well understood and embraced by a wider policy and economic community and often not regarded as a promising approach for GHG reduction. There are several challenges that prevent CCU technologies from gaining wider diffusion: economic barriers related to the cost of CCU technologies and products, technological challenges requiring further improvements, testing, piloting, research and innovation, ambiguity and lack of understanding of CCU technologies’ environmental performance, and policy barriers that are mainly due to uneven playing fields, lack of favourable framework conditions and limited political support. These obstacles are interlinked and to great extent reinforce each other, which means resolving them would require a comprehensive approach and favourable framework and market conditions, measures and incentives.

This study has demonstrated that the environmental, economic and social benefits of the CCU technology deployments could be promising for the local economy, while their wider diffusion can offer solid input towards addressing global climate change imperatives. This study, however, also showed that there are a number of obstacles that prevent the CCU initiatives from easily and quickly penetrating the current industrial and economic systems. Addressing these obstacles would need favourable framework and market conditions that can be created by carefully designed policy measures and incentives. With the proliferation of the circular economy in the EU there are growing calls for carbon removal via re-use and storage in products 4 . Yet, CCU is still not well understood and embraced by a wider policy and economic community and often not regarded as a promising approach for GHG reduction. There are several challenges that prevent the CCU technologies to gain wider diffusion in the market: • Economic barriers related to the cost of CCU technologies and products. • Technological challenges requiring further improvements, testing, piloting, research and innovation. • Ambiguity and lack of understanding of CCU technologies’ environmental performance. • Policy barriers that are mainly due to uneven playing fields, lack of favourable framework conditions and limited political support. These obstacles are interlinked and to great extent reinforce each other, which means resolving them would require a comprehensive approach. Addressing these obstacles would need favourable framework and market conditions that can be created by carefully designed policy measures and incentives. A major policy signal has to come from the EU regulatory landscape where international regulatory framework also needs to be contextualised. National and regional policies are also important in setting local and national ambitions and strategies and driving the local actions. Below are policy recommendations addressing challenges faced by CCU technologies in the EU. They have been generated based on consultation with stakeholders, lessons from the

4 COM(2020) 98 final, A new Circular Economy Action Plan: For a cleaner and more competitive Europe, Brussels, published on 11 March 2020

analysed case studies, as well as suggested in the analytical reports on CCU reviewed in this study.

5.2.1 Recommendations addressing economic challenges Economic challenges are faced by many new technologies arriving on the market, and especially for green technologies as often the environmental sustainability mission does not immediately translate into commercial viability. Economic obstacles faced by CCU projects are related to (i) high price of the product and (ii) high investment cost of CCU projects. (i) Price competitiveness of the CCU products Today, the majority of CCU products produced with captured CO/CO2 are more expensive than traditional chemical synthesis routes so it is difficult to compete with conventional products. As shown in the analysis in this study, price competitiveness remains an issue for all types of CCU products, except for the CCU-based ethanol price that is expected to be comparable to the traditional ethanol production, including the ones produces for biofuel purposes. The current low prices for fossil resources acts as an obstacle to the competitiveness of CO2-based products. High price might also block demand for CCU products, although the study has shown that there are customers ready to pay premium prices for greener products or features of the products (e.g. manufactures of mattresses from CCU polyol, selected water transporters), but those are in a minority. A rise in prices for fossil resources and/or increased availability of renewable energy at the lowest cost possible could support the implementation of such technologies. Without creating favourable framework conditions, regulatory support, boosting or securing market interest, it will not be possible for CCU products to continue competing with cheap fossil-based alternatives.

Recommendations:

Promote public procurement instruments for CCU-based products/services, e.g. public transport and shipping services can specify recycled carbon-based fuels in their green procurement products; construction of public buildings or infrastructure can specify procurement of carbonation-based construction materials. Promote other schemes that will boost demand for CCU products and fuels, e.g. setting specifications for fuel blends, carbonation-based construction materials, recognition under the local green product labelling, etc. Set examples to follow, e.g. public transport companies (train, water shipping) can shift to CCU-based fuel use which would create a secured market for the CCU fuel and help in further rolling out to a wider market. Recognise that CO2 must have a price that induces emitters to re-use it as a resource, wherever fossil replacement technologies are becoming available. Develop mechanisms that effectively lead to a progressive increase of the price of CO2 emissions.

(ii) High investments cost The analysis in this study shows that under the current market and policy framework conditions CCU technologies are not profitable yet. To launch any CCU technology, large investment is needed. Furthermore, many CCU technologies and support processes such as segregation of various gases existing in the flue gas mix, need more research and testing in order to reach

better efficiency. Thus, direct financial support to the research, innovation, development, demonstration, pilot and commercial projects will still be needed.

Recommendations:

Ensure diverse EU funding schemes for upscaling and commercial projects in CCU and related technologies such as green hydrogen. Today, many CCU technologies have been developed in labs; they need incentives and direct support to move to the market. Dedicate special support instruments for industrial symbiosis projects. It can be a purely public funding or co-funding of the new facilities, or a combination of public and private financial instruments with favourable financing conditions.

5.2.2

Recommendations addressing technological challenges The analysis in this study has demonstrated that most of the CCU value chains have not yet reached full commercialisation. Furthermore, there is rising number of promising innovations suggested by scientists and entrepreneurs, for example growing bacterial protein from waste CO2 5 , boosting algae farming with industrial CO2 6 , CO2-based speciality chemicals 7 , and numerous other examples 8 . Maturing these technologies will be key to scaling them up: making them more efficient; ensuring end-products are high quality and safe; reducing their dependence on high energy and resource inputs; and developing efficient and less costly gas separation, hydrogen production and other auxiliary technologies. Looking toward the future, in addition to continuing work on these technologies, research and innovation should be pursued for new routes to valorise industrial flue gases.

Recommendations:

Encourage carbon-intensive industries that have little room to manoeuvre in cutting their carbon emissions, to invest, introduce and integrate carbonrecycling technologies that can also generate additional value in their local economies. The EU should sustain its leadership in CCU technologies by continuously supporting technology development, commercialisation, upscaling as well as R&I in novel carbon-recycling possibilities. Technological barriers that exist now can find solutions via R&I and testing efforts. All these are needed to de-risk the required CCU development trajectories, to explore alternative processes and find economic and environmental optimisations at different scales and with different process setups.

5 NovoNutrients, novonutrients.com 6 https://www.treedom.net/en/blog/post/carbon-dioxide-is-becoming-fish-food-1876 7 https://corporate.evonik.com/en/technical-photosynthesis-25100.html 8 https://carbon.xprize.org/prizes/carbon,

5.2.3 Recommendations on ensuring the environmental performance of CCU The environmental performance of CCU technologies remains the most complex and debated issue. This is because such performance could be unique to each CCU project and depend on a combination of many factors. These factors include (i) the availability of renewable energy as a guarantee of the climate mitigation potential of CCU products that require energy for production processes, as well as (ii) lack of comprehensive LCA assessment methodology for CCU.

(i) Availability of renewable energy The key parameter for CCU product sustainability is its climate mitigation potential which, ideally, should be higher than for conventional products. It depends on the substitution of similar products on the market made from fossil- or bio-based feedstocks; otherwise CCU products would simply create a rebound effect with more material use and CO2 emissions. Use of renewable energy is core in defining the climate mitigation potential of all CCU products as the production process is energy intensive, and in many cases CCU chemicals and fuels are defined as power-to-X, which means they store renewable energy which would otherwise be curtailed. In the methanol production case, powering hydrogen electrolysis with wind- or solarbased electricity could help to mitigate the irregularities in production and use energy that is otherwise not consumed.

From the economic perspective, the CCU product while offering the climate mitigation potential, should also be competitive with conventional alternatives. This is mostly not the case as the analysis in this study shows. The cost of renewable energy is one of the major factors adding to production costs and reducing the demand for –and competitiveness of –CCU products against conventional products. Thus, access to affordable renewable energy sources is key a determinant for the commercial success of CCU product.

Recommendations:

Policy and investment support are highly recommended in expanding renewable energy production, scaling up existing capacities and launching new renewable energy production capacities, which for CCU projects can be off-grid installations, however overall greening of the electricity grid should be the ultimate aim. Addressing the cost of the renewable energy to encourage its competitiveness against fossil-based energy should be a priority policy objective. Wider deployment is one of the ways to cut production costs and prices (which has been seen with the wind energy deployment). Redistributing fossil fuel subsidies 1 to support renewable energy development, as well as using carbon tax revenues for investment in clean energy production facilities, could also be part of the policy support package.

(ii) Lack of a commonly recognised, comprehensive LCA assessment Poor understanding of the environmental benefits and associated footprints –and of the economic returns that CCU projects can generate –are barriers to their eventual development and acceptance. There could be multiple approaches for assessing environmental benefits and impacts using various sets of parameters. The most commonly used parameter in the CCU context is greenhouse gases emissions (GHG) savings, CO2 being the most prominent. To date, there are still no reliable estimates for the total actual implementable saving of GHG emissions via CCU technologies, due to the fact that the

usable emissions described do not correspond with the actual saved emissions: the emissions savings can vary greatly, depending on the employed technology (i.e. can be smaller or larger than the amount of used CO2 emissions, depending, in particular, on the energy to be spent during the process and the emissions associated with that). It is even possible that an increase in emissions will occur. Therefore, a full individual life cycle assessment is necessary to identify the environmental effects of each technology application 9 . Other parameters used in the environmental impact assessment of CCU products can include air and water pollution, energy efficiency, material efficiency, impact on ecosystems, water and land footprints, etc. These impacts, however, are scarcely addressed in CCU related LCA. Furthermore, benchmarking against the environmental footprint of alternative products is not well addressed. For example, there is an emerging debate about offering CCU fuels an even playing field with biofuel because biomass production puts more pressure on the environment due to vast land use and impacts on ecosystems, whereas fuel from CO2 recycling requires no land 10 . Therefore, the need for a comprehensive assessment is increasingly stressed.

Recommendations:

Development of a comprehensive LCA guideline for assessing the environmental impact of CCU projects, as well as common recognition of methodologies across Europe and possibly internationally need to be facilitated on an EU level. For CCU, it is necessary to calculate the CO2 avoided rather than the CO2 used in the process. The methodology should focus not only on climate mitigation and GHG reduction, but also cover other impacts related to ecosystems, water, land use, air, energy, materials and waste. LCA results should become a basis for fair recognition of CCU technologies in the European Emissions Trading Scheme, in as much as they lead to a net reduction of CO2 emissions over the whole life cycle. LCA should also become a basis for demand-boosting instruments for CCU products (e.g. procurement, product certificates and labels, minimum fuel blending quotas, etc.).

5.2.4 Recommendations addressing regulatory gap The analysis presented in the studies, as well as challenges discussed above conclude that there is no proper framework conditions that will help CCU technologies reach wider acceptance and become commercially viable. While the rhetoric of carbon recycling are generally positive in the policy discourse on circular economy, industrial symbiosis, as well as opportunities under the Renewable Energy Directive II (REDII), there are no regulatory provisions that ensure competitiveness. CCU technologies need support through a regulatory framework and a long-term policy that will systematically address the economic, technological, and environmental performance or recognition of related barriers . CCU is not part of the ETS market, and this holds back the development of CCU technologies as industries wanting to decrease GHG emissions by using a CCU solution would not be eligible.

9 EC 2019, Identification and analysis of promising carbon capture and utilisation technologies, including their regulatory aspects by Ramboll, the Institute for Advanced Sustainability Studies, CESR (Centre for Environmental Systems Research at the University of Kassel, CE Delft, and IOM Law, January, 2019 10 CORESYM 2019, CarbOn-monoxide RE-use through industrial SYMbiosis between steel and chemical industries, report prepared by Metabolic under Coresym project

From the discussion above, it is clear that part of the reason for omitting or excluding CCU in ETS is the lack of guidance on LCA. Another issue is that there is no mechanism for setting the price of CO2 (carbon market, tax, etc.).

Recommendations:

Develop a regulatory framework that incentivises both the permanent sequestration of CO2 into, for example, polymers or construction materials by the mineralisation as well as temporary sequestration in CCU fuels. The regulatory setting should assure comprehensive LCA methodology for CCU as a precursor for other regulatory measures (addressed below), and securing an even playing field with bio-based and traditional products. Ensure that CCU is ultimately recognised under the EU Emissions Trading Scheme in order to allow a breakthrough for CCU technologies. Namely, along with the carbon storage via mineralisation, the accrediting of GHG emissions avoided and/or carbon negative emissions should be considered under the EU-ETS. A smart carbon-pricing system should be introduced to push CCU projects into profitable areas. Carbon taxation should be applied with a warrantee of an international level playing field –within Europe and with border-tax adjustments between the EU and the rest of the world. 1 Carbon taxation should also be sensitive to various types CCU products: e.g. carbon tax for CCU fuel could be paid by the CO2 producer, while if it is a CCU product with a longer lifetime (e.g. polymers, construction material) the carbon tax would be paid by the product user. At the same time, benchmarking against footprints of currently used (e.g. fossil-and bio-based) products should be considered in calculating carbon tax. Ensure full implementation of the revised Renewable Energy Directive (RED II), which includes mandatory targets for CO2-based fuels, via rapid and fair adoption of the required Delegated Acts 1 . At the same time, encourage members states and regions to consider concrete strategies and plans on deployment of CCU technologies in achieving the 2030 and 2050 climate targets and the new EU Green Deal goals. Ensure that standardisation bodies (CEN and national bodies) work hand in hand with industry in developing required standards for the new CCU industry (e.g. standards for the quality of captured CO2). Align policy and regulatory development around industrial symbiosis and CCU, such as on standards development, reporting, indicators, and for promoting CCU by building favourable framework conditions for industrial symbiosis.

CCU is the process of capturing polluting CO and CO2 emissions and either using them directly as a carbon resource or transforming them into a new product through biological or chemical processes. CCU has the ability to transform most polluting industries, diversifying outputs and turning a liability into a strength.

Challenges:

While the technology has already been successfully demonstrated, the efficiency of chemical processes and innovation in new pathways have to be increased. Doing so will not only increase the economic viability of CCU but will also offer alternative applications for this resource.

If commercial success is to be achieved, funding will play a primary role in order to negotiate the economic obstacles. Collaboration between public and private organisations is an essential part of the future of CCU technology, as this will allow to overcome the current financial barriers for large-scale commercialisation.

Considering the role of the public sector in supporting the implementation of CCU, regulations should reflect the necessity for our current society to move from fossil fuels to

CO2. Ensuring conformity of legislative changes with the low-carbon agenda at each level of government will be a challenge that needs to be addressed.

The lack of information in terms of the societal perception of CCU technology is the final issue that needs to be addressed. Diffusing knowledge on the benefits and risks of CO2- based products will go a long way to underling its potential to a wider audience. From challenges to strengths: • CCU has been identified as a potential driver of growth in the future EU low-carbon circular economy. CO2 is a future replacement for fossil hydrocarbons. • CCU can facilitate the European energy transition. For example, while the transition to lowcarbon energy sources is in full swing, intermittent/insecure supply continues to be a major obstacle for these renewable options. Synthetic fuels may be the solution required to address this problem, enabling a riskless and sustainable transition. • The most straightforward benefit of CCU is the reduction of carbon emissions. Not only does the utilisations of CO and CO2 allow for long-term storage in new products, it also greatly diminishes the addition of ‘fresh’ hydrocarbons into the current economy. • Utilisation of carbon emissions can be commercialised globally (a benchmark non-EU case is the Shaugang project in cooperation with LanzaTech).

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